DEA investigation in Ohio drags on for years, with millions of dollars and assets still in government custody

CLEVELAND, Ohio — Four years after federal authorities in Cleveland seized millions of dollars, cars, jewelry and property as part of a drug investigation that includes allegations of money laundering and illegally billing people on their phone bills, prosecutors have not filed any charges.

Meanwhile, the government continues to hang on to most of the money and property as the targets of the investigation, including some from Lake County, fight to get it back.

The allegations center on people who operated or were tied to phone directory companies Discount Directory Inc. and Enhanced Telecommunication Services, and whether drug money was laundered through the companies. The case is laid out in court filings, and AT&T Services has agreed to pay $7.75 million as part of a settlement with the Federal Communications Commission to refund customers who were scammed by the two companies.

Court records show the investigation stretches back until at least 2014. It was not immediately clear if and when prosecutors would file charges or who could face them. However, court filings from September show a criminal investigation remains active.

An attorney for two people in the case said the government’s decision to hold on to the seized money for so long has caused strain on his clients.

“We are grateful that the US Attorney’s office has been reviewing this matter without a rush to judgment and that we will eventually have Judge Boyko resolve these important issues,” Craig Weintraub, an attorney for Dominic Schender and Roberta Eldridge, two people who filed claims for seized money and property, said in an email. “By the same token it is inconceivable that in the United States money and property can be taken and held without a hearing and without regard to the huge impact the seizure has on a family.”

U.S. Attorney’s Office spokesman Mike Tobin declined comment.

Years-long investigation

The investigation spans the administrations of four different U.S. attorneys in Cleveland. Agents seized more than $2.8 million in cash and in various bank accounts, as well as cars, property and jewelry, on three separate occasions in 2014 and 2015.

Now-retired Assistant U.S. Attorney Phillip Tripi wrote in a 2015 complaint for forfeiture that Kirtland resident Brandon Selvaggio conspired with Schender, who lived in Pueblo, Colorado, and others to commit wire fraud.

The complaint said Selvaggio formed companies that were supposed to provide directory assistance services to phone customers. The companies then contracted with telecommunication companies, including AT&T. But Selvaggio’s companies never actually provided the services, even though customers were billed for them, an illegal practice known as cramming, the filing stated.

The DEA discovered the illegal billing while investigating Schender, Selvaggio and others for drug crimes and money laundering, according to an FCC news release. The forfeiture complaint said Schender appeared to be growing marijuana on his property in Colorado and using Selvaggio’s phone directory companies, among others, to launder money.

In addition to Schender and Selvaggio, prosecutors name Lake County residents Iris Baker, Gabriel Saluan, Gregory Harris, John McCoy and Chelsea Baker as part of the conspiracy and said the case also deals with marijuana distribution in Lake County. The government also has seized property from Eldridge, Schender’s ex-girlfriend, court records show.

Civil forfeiture case also drags on

U.S. District Judge Christopher Boyko, who presides over the civil forfeiture case, repeatedly put the case on hold between its filing in 2015 and August 2018. By that point, federal prosecutors said they would allow for some discovery to go on while the criminal investigation continues, Tripi wrote in a court filing in August.

The judge and the people seeking the return of their money agreed and the litigation began. Some progress was made, too, as the government agreed to return more than $67,000, records show.

However, the majority of the criminal and civil actions are unresolved. To complicate things, the case is now on pause, along with all other civil cases involving the U.S. government in northern Ohio, as a result of a partial government shutdown. Civil attorneys in the U.S. Attorney’s Office are furloughed until President Donald Trump and Congress resolve their impasse over the president’s desire to receive $5.7 billion for a wall on the U.S.-Mexico border.

Weintraub lamented the recent stay and said he and his clients “are at the mercy of the President and legislators to resolve the issue that caused the shutdown.” Once the shutdown is over, he hopes he can resolve the case.

"Until then, my client continues to wait for his day in court,” Weintraub said.

Attorney Ian Friedman, who represents Iris Baker, declined comment, as did Salun’s attorney George Argie. A lawyer for Selvaggio, who has filed claims for the seized property, did not return a phone call and an email.

Reasons for delay

It is not uncommon for criminal investigations, especially white collar cases overseen by federal prosecutors, to stretch on. Local high-profile cases such as investigations into corruption in Cuyahoga County lasted for years, with some defendants not facing charges for three years or more after the inquiry began.

The wrinkle involving seized property provides a twist, though, as the targets of the investigation have said the seizures, have squeezed the people whose money was taken.

Edward LaRue, an attorney for Selvaggio, told cleveland.com in 2016 that his client was “financially hamstrung” as a result of the seizures.

Dan Alban, an attorney with the libertarian-leaning legal firm Institute for Justice, said he was not familiar with the case in Ohio but noted that prosecutors sometimes use civil forfeiture cases to starve investigation targets of the financial ability to hire good attorneys and properly defend themselves.

Alban, whose organization generally opposes civil forfeiture without charges being filed and, also noted, however, that cases can sometimes drag on and be put on hold because targets don’t want to be put into a position to say anything that could incriminate them.